New car plate restrictions fuel Beijing black market

By Samuel Shen and Kazunori Takada

4 Min Read

A Porsche is parked at a parking lot of a shopping mall in the rain in Beijing June 5, 2013.Kim Kyung-Hoon

SHANGHAI (Reuters) - Beijing's clampdown on new car registrations is creating a scramble for license plates and fuelling a boom on the black market where prices have hit as high as $33,000, almost double the price of China's best-selling car, the Ford Focus.

Keen to curb pollution and traffic jams, China's capital city instituted a lottery in 2011, where it initially awarded plates to one in 10 people hoping to get a car. This year, Beijing will cut the allocation of new number plates by 40 percent to 150,000, meaning only one in 150 will get a plate.

The long odds have created a thriving black market, even though it is illegal to buy, sell or rent a number plate. Those eager to own a car say they are willing to take the risk.

"I participated in every lottery over the past two years but have never won. I'm desperate," said Han Kuilong, an office worker who last month rented a car plate for 5,000 yuan ($830) a year.

"I live on the outskirts but work in downtown. Life is very inconvenient without a car," Han said.

The Beijing government's traffic management bureau confirmed that trading in car plates was illegal, but did not immediately respond to requests for more details.

Lawyers say the government can fine people involved in car plate transactions and revoke their licenses, but the practice is so widespread it is impossible to police.

"Such deals are unlawful," said Yang Lisha, a Beijing-based lawyer. "But many people are in this market, so the cost of enforcement is very high."

Beijing resident Zhang Cheng said he has been taking part in the lotteries for the past two years, but his patience has run out and is now seeking to rent a plate. An online lottery this month attracted nearly 2 million participants for about 25,000 plates to be handed out in February.

"The government is depriving us of our rights to enjoy a better life. Instead of restricting car plates, they should build more roads and improve infrastructure," Zhang said.

Estimates on the size of the black market are hard to come by, but a car dealer in Beijing, speaking on the condition of anonymity, said his firm rented out nearly 200 plates in 2013. There are also several web sites that carry hundreds of postings soliciting or offering car plates.

"Demand has been very hot recently because winning a car plate through lottery is getting more and more difficult," said a manager at Beijing Sunshine Aomei Asset Management Co, which says on its website that it buys and sells car plates.

Prices of car plates have surged to around 200,000 yuan apiece from 120,000 yuan just six months ago, said the manager, who declined to be identified because of the sensitivity of the matter. Several other car plate dealers also quoted similar figures.

FINDING LOOPHOLES

So far, four other cities - Shanghai, Guangzhou, Guiyang and Tianjin - have also implemented car restrictions and more are expected to follow suit. Some cities use an auction-system to allocate number plates while others use a combination of lotteries and auctions. Beijing and the southern city of Guiyang hand out car plates only through lotteries.

If a car owner in Beijing wants to buy a new car, he or she must cancel the old car plate and apply for a permit to get another plate for the new vehicle. These permits allow car owners to bypass the lottery.

While many companies are reluctant to publicize their involvement in the black market, some say the permit system allows them to lease out car plate legitimately.

Wang Shaoyong, sales manager at a Peugeot dealer in Beijing, said his shop provides car buyers with license permits from a partner firm that has many car plates registered in its name.

Wang said this practice, which he called leasing, is legal. "Many people desperately want a car, so we're helping them through financial innovation. This is perfectly legitimate."